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Wood v. Provident Life and Accident Insurance Co.

United States District Court, D. Arizona

May 29, 2018

Thomas Scott Wood, Plaintiff,
Provident Life and Accident Insurance Company, Defendant.


          David G. Campbell United States District Judge

         Plaintiff Thomas Wood, M.D., filed a complaint against Defendant Provident Life and Accident Insurance Company, alleging that it violated the parties' contract by withholding certain disability insurance benefits. Doc. 1-1 at 5-12.[1] Each party has moved for partial summary judgment on the cause of Plaintiff's disability. Docs. 46, 51. Plaintiff also asks the Court to reopen discovery (Doc. 51 at 8), and Defendant asks the Court to strike some of Plaintiff's evidence (Doc. 67 at 9-12). The motions are fully briefed and, unfortunately, the Court has no time available for oral argument before the month of July. Because the Court does not wish to delay resolution of these motions that long, and oral argument will not significantly aid the Court's decision, the Court issues this order without oral argument. Fed.R.Civ.P. 78(b); LRCiv 7.2(f). The Court will grant partial summary judgment to Plaintiff.

         I. Preliminary Issues.

         A. Residual Disability and the Motion to Reopen Discovery.

         Defendant granted Plaintiff limited disability benefits after determining that he is totally disabled due to a “Sickness, ” as defined by the insurance policy. Doc. 52-3 at 3. Defendant seeks summary judgment on two issues: (1) whether Plaintiff is residually disabled, and (2) whether an “Injury” caused Plaintiff's disability. Doc. 46. Plaintiff contends that the Court should not consider the first issue. Doc. 51 at 5-8.

         1. Waiver.

         Plaintiff argues that Defendant waived the residual disability argument by not raising it as an affirmative defense. Doc. 51 at 5-6. The Court is not persuaded, however, that the argument is an affirmative defense. “An affirmative defense is a defense that does not seek to negate the elements of the plaintiff's claim, but instead provides a basis for avoiding liability even if the elements of the plaintiff's claims are met.” S. Gensler, Federal Rules of Civil Procedure, Rules and Commentary to Rule 8 (2018) (citing cases). Plaintiff has the burden of proving that he was entitled to full disability benefits under the contract, something he cannot do if he fails to prove that he was unable to work. The residual disability argument negates an element of Plaintiff's claim, and is not an affirmative defense.

         And even if the argument is an affirmative defense, the Ninth Circuit has held that affirmative defenses are not waived if they were unavailable when an answer was filed. See Panaro v. City of N. Las Vegas, 432 F.3d 949, 952 (9th Cir. 2005). Defendant plausibly demonstrates that it did not learn Plaintiff was still working until after it filed an answer and conducted discovery in this case. The Court declines to find waiver.

         2. Estoppel.

         Defendant's initial claim investigation concluded that Plaintiff was totally disabled. Doc. 52-2 at 2. Plaintiff contends that this initial finding precludes Defendant from now arguing that he is residually disabled. Doc. 51 at 6-7. Specifically, Plaintiff argues that an insurer cannot change the basis for its coverage decision during litigation “if the insurer knew, or should have known of the additional basis for its decision.” Id. at 6. The treatise Plaintiff cites acknowledges that the relevant law varies among the states. See Id. (citing Steven Pitt et al., 14 Couch on Ins. § 198:54 (3d ed. 2017) (noting that “there is contrary authority”)). Plaintiff appears to agree. See Doc. 73 at 5 (noting that “[a]t least some courts disagree” with the proposition that an insurer can change its disability determination in subsequent litigation). But Plaintiff does not cite, and the Court has not found, any controlling Arizona law on this issue.

         And in any event, Plaintiff does not meet the standard he proposes. Plaintiff contends that Defendant knew or should have known that he continued to work at the time it made its findings of total disability in January and August 2016. Doc. 51 at 7. Plaintiff emphasizes that Defendant interviewed his treating physicians and reviewed voluminous records that included a single note that Plaintiff had “stopped working as much.” Id. (citing Doc. 47-4 at 88). Defendant counters that Plaintiff impeded its initial disability investigation by misrepresenting whether he had returned to work after August 2015. Doc. 67 at 5. Specifically, Plaintiff's application for disability benefits indicated that he had not returned to work as an anesthesiologist. Doc. 47-2 at 26. Plaintiff also submitted monthly reports to Defendant starting in January 2016 in which he represented that he had neither returned to work nor “worked anywhere for pay, profit, or any other type of earnings.” Doc. 68-1 at 19-35. Plaintiff now concedes that he performed some anesthesia procedures after his alleged onset of disability and continued to earn income for managing his business. Doc. 73 at 3; Doc. 52-4 ¶¶ 36, 40-42.

         The Court concludes that a single treatment note indicating that Plaintiff had “stopped working as much” did not put Defendant on notice of the residual disability argument, especially in light of Plaintiff's repeated representations that he was not working. The doctrine of estoppel does not apply.

         Plaintiff also claims that Defendant did not reveal the residual disability defense until January 26, 2018, when it filed its motion for summary judgment. Doc. 51 at 5; Doc. 73 at 4. But during the Court's pre-motion conference, Defendant stated its intent to seek summary judgment on this ground. Court's Livenote Tr. (Jan. 9, 2018). Plaintiff's counsel acknowledged this argument and expressed his intention to oppose it. Id.[2]

         3. Rule 56(d) Motion.

         Plaintiff requests that the Court delay its ruling on residual disability until the parties can complete at least 90 days of discovery on the issue. Doc. 51 at 8. Rule 56(d) grants the Court discretion to defer or deny a motion for summary judgment in order to allow more time for discovery where the opposing party “shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition[.]” When making a Rule 56(d) determination, the Court should consider “whether the parties have diligently conducted discovery prior to the Rule 56(d) motion, whether they complied with the procedural requirements of the Rule, and whether further discovery would aid the party opposing summary judgment or merely delay the proceedings.” Roosevelt Irrigation Dist. v. Salt River Project Agric. Improvement and Power Dist., No. 2:10-CV-290-DAE (BGM), 2016 WL 3613278, at *2 (D. Ariz. Feb. 22 2016).

         In this case, the parties do not dispute the diligence with which Plaintiff conducted discovery prior to making this Rule 56(d) motion. And the Court finds that any lack of preparation on the residual disability issue was reasonable in light of the narrow scope of the issues during the discovery period. Defendant's initial claim evaluation resulted in a finding that Plaintiff was totally disabled (Doc. 52-3 at 3), and the parties identified a single issue for the first phase of discovery and summary judgment briefing: whether a Sickness or an Injury caused the disability (Court's Livenote Tr. (Sept. 1, 2017)). This residual disability argument apparently was first revealed on January 9, four days after discovery had closed.

         Plaintiff also has complied with the procedural requirements of Rule 56(d) by submitting a declaration of counsel specifically stating the need for further fact discovery to adequately respond to Defendant's residual disability arguments. See Doc. 54-1. Plaintiff seeks to depose Defendant's representative regarding its “interpretation and application of the ‘residual disability' provisions of the Policy.” Id. ¶ 6. Counsel states that this information will support arguments that (1) Defendant has misapplied the Policy with respect to its “residual disability” provisions, and (2) Plaintiff's administrative work was so minimal that it is immaterial to the disability determination. Id. ¶ 7. The Court concludes that counsel describes with sufficient particularity the facts he expects to learn from the anticipated discovery and their value for summary judgment.

         The Court cannot conclude that the additional discovery sought by Plaintiff will shed no light on the residual disability issue. See Jones v. Blanas, 393 F.3d 918, 930 (9th Cir. 2004); Terrell v. Brewer, 935 F.2d 1015, 1018 (9th Cir. 1991)). The Court will grant Plaintiff's Rule 56(d) motion and deny the summary judgment motions on the residual disability issue without prejudice to their refiling after additional discovery.

         B. Dr. Rovner's Expert Opinion.

         Defendant contends that the timing of Dr. Robert Rovner's expert disclosure requires the Court to preclude his opinion for purposes of summary judgment. Doc. 67 at 10-11. Plaintiff counters that he disclosed Dr. Rovner's opinion before the Court's discovery deadline. Doc. 73 at 7-8.

         The Court's case management order identifies January 5, 2018, as the deadline for the first phase of discovery. Doc. 14 ¶ 4. Defendant received Dr. Rovner's expert disclosure on January 2, 2018. Doc. 69-1 at 26-30. Defendant contends that it should have received this disclosure at least ten days earlier because Plaintiff received the expert disclosure on December 18, but did not mail it to Defendant until December 28. Doc. 67 at 10-11. Defendant also argues that the January 2 disclosure was inadequate insofar as it failed to include Dr. Rovner's prior testimony and fee schedule. Id. at 11. Plaintiff supplemented his disclosure to include that material, but not until January 8. Doc. 69-1 at 32-34.

         To be clear, Defendant does not request an opportunity to depose Dr. Rovner, take further expert discovery, or present a rebuttal opinion. Defendant asks only that the Court preclude Dr. Rovner's opinion on the central issues of this case because his disclosure arrived three days before the deadline. Doc. 67 at 12. The Court declines to do so. The Court set a short discovery schedule to precede summary judgment motions on a potentially dispositive issue, and did not put in place typical expert disclosure deadlines. Plaintiff's expert disclosure was made before the discovery deadline established in this shortened schedule. It would be unduly punitive to preclude an expert opinion that was disclosed within the discovery period. And as noted above, preclusion is the only relief Defendant seeks - it does not request further discovery or an opportunity to present a rebuttal expert opinion.

         C. Declarations of Treating Physicians.

         Defendant asks the Court to strike the declarations of Drs. Edward Prince, Jon Obray, and Kade Huntsman. Doc. 67 at 9-12. This case is subject to the Mandatory Initial Discovery Pilot Project (“MIDP”). Doc. 14 ¶ 1. The MIDP requires that initial disclosures identify persons who “are likely to have discoverable information relevant to any party's claims or defenses, and provide a fair description of the nature of the information each such person is believed to possess.” Gen. Order 17-08 ¶ B(1). The MIDP also requires parties to disclose any written statement “relevant to any party's claims or defenses . . . if it is in your possession, custody, or control.” Id. ¶ B(2). If a party identifies supplemental information after its initial disclosure, that party must supplement its response “in a timely manner, but in any event no later than 30 days after the information is discovered by or revealed to the party.” Id. ¶ A(8). “[F]ull and complete supplementation must occur by the [discovery] deadline.” Id.

         Plaintiff's initial disclosure identified Drs. Prince, Obray, and Huntsman as persons with “discoverable information regarding Plaintiff's injury, and his treatment of Plaintiff's injury.” Doc. 73-5 at 3; see Doc. 73-5 at 4-5. But Plaintiff did not disclose their declarations until the summary judgment briefing process. See Docs. 52-7, 52-8, 60-1, 67 at 9-11. Defendant asserts a violation of the MIDP and asks the Court to strike what it characterizes as “untimely” evidence. Doc. 67 at 9-11.

         The Court finds no error. The MIDP requires timely disclosure of written statements in a party's “possession, custody, or control.” Gen. Order 17-08 ¶ B(2). Each of the declarations was executed after the January 5, 2016, discovery deadline. See Doc. 52-7 (February 21, 2018, for Dr. Huntsman), 52-8 (February 23, 2018, for Dr. Obray), 60-1 (March 2, 2018, for Dr. Prince). And Plaintiff revealed each statement within 30 days of its execution. See Doc. 52-7 (2 days for Dr. Huntsman), 52-8 (same day for Dr. Obray), 60-1 (12 days for Dr. Prince).

         Defendant next argues that each of the declarations contains impermissible opinion testimony that Plaintiff did not disclose pursuant to Rule 26(a)(2). Doc. 67 at 12. Disclosures under Rule 26(a)(2)(A) must include the identities of treating physicians who have not been specially employed to provide expert testimony in this case, but who will provide testimony under Federal Rules of Evidence 702, 703, or 705. A Rule 26(a)(2)(B) report is required for any opinion of such witnesses that was not developed in the course of their treatment. See Goodman v. Staples the Office Super Store, LLC, 644 F.3d 817, 826 (9th Cir. 2011). Thus, Plaintiff may not call any treating physician to render an expert opinion that was not developed in the course of treatment unless that opinion was set forth in a Rule ...

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